Vietnamese economy rosy in Q1, still faces bumpy road ahead

Thriving industry: Visitors walking to board a cruise ship at the Ana Marina dock in Nha Trang. Vietnam welcomed nearly 91,000 foreign visitors after it reopened the tourism market. — Bloomberg

HANOI: Vietnam’s production and business recovered in the first quarter of this year, but are still encountering many obstacles, including adverse impacts of the global pandemic and the ongoing Russia-Ukraine conflict, said local experts and international organisations.

According to Vietnam’s General Statistics Office (GSO) under the Ministry of Planning and Investment, the country’s gross domestic product (GDP) grew 5.03% in the first quarter of this year, compared with 4.72% in the same period last year, and 3.66% in the first quarter of 2020, creating a springboard for economic growth in the next quarters of 2022.

“Vietnam’s economy gradually recovered with production and business activities being speeded up in the first quarter of this year.

The country will post higher GDP growth in the second quarter because of its comprehensive reopening and better containment of Covid-19,” local economist Dinh Trong Thinh, a veteran lecturer of the Academy of Finance under the Ministry of Finance, told Xinhua.According to him, the highlight of Vietnam’s economic growth in the first quarter of 2022, when the global supply chain began to resume and regain momentum, was the remarkable acceleration of a “three-horse carriage,” namely investment, export and consumption.

Between January and March, the realised social investment capital at current prices stood at 562.2 trillion Vietnamese dong (US$24bil or RM104bil), posting a year-on-year rise of 8.9%.

In the three-month period, the realised foreign direct investment capital increased by 7.8% on-year to over US$4.4bil (RM18.5bil), the first-quarter biggest amount over the past five years.

Meanwhile, Vietnam welcomed nearly 91,000 foreign visitors, up 89.1% from the same period last year, after it reopened the tourism market, resuming many international air routes.

Regarding export, the country earned nearly US$88.6bil (RM374bil) from shipping goods, including 15 items with each export turnover of over US$1bil (RM4.2bil), abroad in the first quarter of this year, surging 12.9 % on year.

It gained a trade surplus of US$809mil (RM3.4bil).

Meanwhile, total retail sales of consumer goods and services stood at 1,318 trillion Vietnamese dong (RM243bil), up 4.4 % year-on- year.

“Besides the three bright spots of investment, export and consumption, many service sectors, including finance, banking and insurance, transport and warehouse, and wholesales and retails, made bigger contributions to Vietnam’s economic growth in the first quarter of this year,” said Thinh.

However, the economist expressed his worry about a potential high inflation rate. “I am afraid that the consumer price index (CPI) this year may double against last year,” he said, noting that CPI increased 1.84% in 2021, and grew 1.92% in the first quarter of 2022, when many countries in the world faced the biggest price hike in several decades.

Economic growth in some of Vietnam’s major partners such as the United States and the European Union is forecast to decline.

Vietnam will find the GDP growth target of 6%-6.5% set for this year by its top legislature challenging, GSO general director Nguyen Thi Huong told reporters in late March.

To realise the economic growth target, Vietnam will centre on taking seven groups of measures, including effectively curbing the Covid-19 pandemic while assisting enterprises in recovering and developing in the 2022-2023 period; controlling prices of essential goods and services and ensuring their supplies; boosting domestic production, including electricity generation; fostering the local market as well as export in a sustainable way; quickly recovering the tourism market; accelerating administrative reform; and actively dealing with natural disasters, she said. — Xinhua

On April 5, the World Bank lowered its forecast for Vietnam’s GDP growth this year to 5.3%, down from the projection of 6.5% it made last October.

Over 78% of the Vietnamese population is fully vaccinated, but the economy still faces serious downside risks from possible new variants, the global ripple effects of the Russia-Ukraine conflict, rising commodity prices and economic slowdown in its major export markets, said the bank.

“Economic recovery will also hinge on the recovery of the domestic private demand, which has been slow, highlighting consumers and investors uncertainty. The current surge in infections may lead to temporary labour supply and production disruptions,” stated the World Bank.

On April 6, the Asian Development Bank predicted Vietnam’s economy would expand 6.5% this year when developing economies in Asia are set to grow 5.2% amid global uncertainty. - Xinhua

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Vietnam , gross domestic product , GDP


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